the company considering its project. the required equipment investment by the company is $5000 (CCA rate 25%) with an expexted revenue of $20000 in year 1, increasing by 5% per year for the 5-year life of the project. Cost in year 1 are expected to be $5000 increasing by 3% per year for 5 year life of the project. the salvage value of the equiment at the end of the five year is 5000 and the tax rate is 40%.

What is the NPW of the project and the IRR if the MARR is 15%?

Question

the company considering its project. the required equipment investment by the company is $5000 (CCA rate 25%) with an expexted revenue of $20000 in year 1, increasing by 5% per year for the 5-year life of the project. Cost in year 1 are expected to be $5000 increasing by 3% per year for 5 year life of the project. the salvage value of the equiment at the end of the five year is 5000 and the tax rate is 40%.

What is the NPW of the project and the IRR if the MARR is 15%?

YEAR	CASH FLOW
0	-$700
1	0
2	100
3	200
4	300
5	300

	A	B	C
First cost	$1000	$2000	$3000
Uniform annual benefit	$150	$150	$0
Salvage value	$850	$2500	$5200
Useful life	5 years	5 years	5 years

Data	P	Q	R
Initial Cost	$5000	$1000	$2500
Uniform Annual Benefits	$650	$0	$350
Salvage Value	$5000	$1760	$2000
Useful Life in Years	20	5	10

	A	B
Cost	$50,000	$40,000
Savings per Year	$13,000	$10,000
Depreciation Method	Straight Line	Straight Line
Useful Life (Yrs)	5	5
Declared Salvage Value	$5000	$4000
Expected Sale Price	$6000	$6000

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